Spread the risk abroad: tips for property investors

Tuesday, July 02, 2013

Spread the risk abroad: tips for property investors

With banking crises popping up all over the place, never mind riots and volatile economies, it can pay to spread the risks when investing abroad.

Here Robin Barrasford, Managing Director of overseas property developers Barrasford and Bird Worldwide suggests you might consider a portfolio of purchases.

Investing in overseas properties has never been more convenient and it can be extremely lucrative with comparatively low risks, especially if you look at fractional purchases.

For those who are looking to acquire several properties abroad, spreading across a range of countries should be considered as this has a range of benefits.

There is a general rule - the bigger your portfolio, the more it makes sense to diversify where your properties are located, whether they are nearby or oceans apart.

Why is this the case? You can find fantastic value if you look in the right locations, especially in emerging markets, as well as dispersing any potential risks.

There's still a lot to consider however, so I want to share with you a few tips to help you increase your chances of success.

Go fractional - Fractional purchases are what they sound like - you buy a fraction of a property (typically a 13th or 26th) as part of a shared ownership with other like-minded investors. This is the modern way of purchasing a property abroad and it's very popular - around 95 per cent of all our properties are sold as fractions.

For example, Halycon Retreat in France, which includes the Chateau de la Cazine (pictured) suites and apartments has shares or fractions from £16,000.

Purchasing a fraction can mean that you have more to spend on additional fractions to diversify your portfolio, rather than having a full purchase with all your money tied into one property. Should you get usage as part of your purchase, a fraction makes luxury much more accessible, so you can experience the high life a lot more easily.

Increase capital growth potential - If you chose the right location and type of property, financial rewards can be significant. This is especially relevant for emerging markets, as we have seen in countries like Bulgaria. However, some established markets are looking good too.

Florida, for example, has recently seen record low property prices yet welcomes more and more tourists' year on year, an almost perfect combination for investors. It's worth remembering that a vast majority of the 'Sunday Times Rich List' is made up of people who have made their money in property - and they will have diversified significantly.

Security, income and other benefits - Things like personal usage, rental bonuses and assured resale offers quite often come as added benefits to investments if you're buying from an established developer. From our experience we find that some investors that have a period of yearly usage quite often don't use all the time they have available, which can be a concern for them.

However, if you buy a fraction especially, this isn't a problem - someone is managing the property on behalf of the investor whilst they're not using the property and they are working to bring in rental money all year round. This makes things a lot easier for an investor compared to trying to manage it themselves.

Stability - It's important to understand the political and economic situation of a country before you invest overseas. Knowledge of local and global events will help you determine which places are more ideal for you. Remember, there can be hidden opportunities even if a country is experiencing short term issues.

Facilities are key - Particularly important if you're looking to rent one of your properties out, look out for facilities within easy reach of the property that you're interested in. The more there is, the more rental and future resale potential there could be. Also, if you're investing in a developed property, check quality standards of furnishings etc. before putting pen to paper.

Local knowledge - Thanks mainly to the web it's now easier to collect a wealth of knowledge about an area you're looking at investing in. Look into things that could be largely hidden but could benefit your investment - history for example. Visiting the area and, if possible, the property before purchasing is also essential.
Even as a developer, we are using many of these tips practically on a daily basis, diversifying our own portfolio of countries from Bulgaria to the US, UK to Malaysia. It spreads any potential risk and also gives us the chance to offer investors some fantastic value, especially in emerging markets.

Start your search for an overseas property here with our three hottest markets: Spain, France or Florida.


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